"Compared to What?" provides researched information about America's economic issues and problems. Compared to what goes beyond scripted talking points, by gathering historical information on specific topics and issues, then reviewing, evaluating, and reporting the evidence in a "reasoned and thoughtful manner"!

Tuesday, March 29, 2011

Roosevelt's-New Deal Compared to Reagan's Reaganomics

By: Dan Reed, American Citizen

For thirty-years Americans have received a repetitive drumbeat of anti-tax and anti-government rhetoric designed to convince the American people that our U.S. Government can’t do anything well, and each dollar of taxes is always a dollar wasted! These same groups keep telling Americans “Washington doesn’t have a revenue problem, it has a spending problem.” So I asked myself “Compared to what”?

Over the past seventy-five years, the American economy has shifted between two different economic philosophies: Roosevelt's-New Deal, and Reagan's-Reaganomics. So I devoted some time researching the impact these two philosophies have had on the U.S. Economy.

Roosevelt’s-New Deal, Keynesian Economics, and Progressive Taxation:

Franklin D. Roosevelt's (FDR) 1935 New Deal Programs were created in response to the 1929 Wall Street Crash, and 1930's great depression. FDR's-New Deal expanded government's role in the depression ravaged economy, and enacted laws that regulated Wall Street business practices. FDR's-New Deal was generally credited with beginning America's climb out of the great depression

FDR’s-New Deal embraced an economic philosophy that believed in capitalism, but understood that “Free Market Capitalism could not be trusted to run itself”! Keynesian economists believed government should play an active role in the economy! Keynesian economics greatly influenced America’s economic system from 1935 until 1980.

A third factor in FDR’s-New Deal was the progressive tax structure that had been in place since 1913. Progressive taxation was based on a very simple concept: the more income earned, the higher the tax rate! The progressive tax structure included 15 income tax brackets, which gradually increased tax rates (like a ladder) from a low rate of 14% to a top rate of 70%. This method produced a “blended rate”, not a fixed rate, or a flat rate!

American history indisputably documents the U.S. Governments Exceptional Achievements from 1935 through 1980: Building Schools, Roads, Bridges, Hoover and other major Dams, and creating the Tennessee Valley Authority. America and its allies defeated the German Nazi’s in Europe, and the Japanese Empire in Asia. American taxes paid down most of the WWII national debt. American Schools were the best in the world! American Cities were clean, and modern. Many businesses were started with long-term low interest SBA Loans. American banks were the most stable in the world! American Corporations became the richest in recorded world history! The American “middle class” became the richest in the world! America built an interstate highway system unmatched in the world. America’s military became the most powerful in the world. NASA Astronauts traveled to the moon, NASA invented the shuttle spacecraft, and NASA launched a satellite system that created instant global communications. The American economic system defeated Soviet Communism! The CIA created the Internet. “These Exceptional American Achievements were totally funded by the Progressive Tax System”!

Ronald Reagan’s 1980 election ushered in a new American economic philosophy. Reagan’s conservative principles were incompatible with FDR’s-New Deal, Keynesian Economics, and Progressive Taxation! Reagan referred to FDR’s-New Deal as “Big Government-Tax and Spend”. Reagan won election on a conservative platform, promising: small limited government, low taxes, and unregulated business. Reagan strongly believed the American people, and American businesses were taxed too much! Reagan, and his conservative allies pledged to “Starve the Big Government Beast”! This pledge became known as “The Reagan Revolution”!

Reagan’s-Reaganomics embraced an economic philosophy, which believed that “Free Market-Laissez-Faire Capitalism” should regulate the economy, and government involvement in the economy is unnecessary and harmful! Reagan and his conservative allies strongly believed that cutting taxes would stimulate American business investment and economic growth in the USA! Reagan explained this economic growth would increase government revenues, and “trickle down” to middle income people in the form of higher wages and more jobs. Reaganomics has greatly influenced the U.S. Economy from 1981 to the present.

Reagan and his conservative allies achieved enormous success with their pledge to “Starve The Big Government Beast”:

In 1981, Reagan cut taxes23%, and lowered the top tax rate from 70% to 50%. In 1986, Reagan eliminated eleven of the top fifteen upper income tax brackets, which gutted Americas progressive tax structure. Reagan then cut the remaining four brackets from a top rate of 50% to 28%. These two laws lowered tax rates on higher incomes by more than 50%! Progressive taxation was replaced with 61,000 pages of tax deductions and loopholes, “expertly crafted to redistribute America’s enormous wealth”, to; Wall Street Bankers, Multinational Corporations, and Aristocrat heirs.” Reagan’s tax structure has been in place forthirty consecutive years!

Reagan promised his tax cuts would increase U.S. Government revenues through increased economic growth. However, over the past thirty years, the U.S. National Debt increased 1500% from $900 billion in 1980, to $14 trillion today!Furthermore, trillions of dollars were borrowed from the FICA-Trust Fund to offset huge annual deficits and avoid raising taxes! Boomers are beginning to retire, and the FICA-Trust Fund IOU's are coming due. So conservatives want to cut Social Security benefits, to avoid the tax increases required to pay "Social Security Obligations"!

My research clearly shows: FDR’s-New Deal created the most prosperous economy in U.S. history! Reaganomics successfully starved U.S. Government Investments in America.Reaganomics, coupled with a drumbeat of repeated anti-tax, and anti-government rhetoric, ruined the U.S. Economy and produced an American Economic Disaster! In the meantime, Free Market Capitalists invested their THIRTY annual tax cut windfalls “In Foreign Markets”!TheAmerican Economy was hijacked!

Hello Anonymous, thank you for your recent comment. Comments are always welcome at compared to what? Regarding your claim that the national debt increased by $7 trillion during Obama 3 years: your statement is significantly incorrect! Here is the history of the growth of U.S. national debt from 1981 to the present.

* 1981-1989 the debt grew from $900 billion to $2.7 trillion,

* 1989-1992 the debt grew from $ 2.7 trillion to $4.5 trillion,

* 1933-2000 the debt grew from $4.5 trillion to $5.6 trillion,

* 2001-2008 the debt grew from $5.6 trillion to $10.7 trillion,

*10-2008-9-2009 the debt grew from $10.7 trillion to $12 trillion**

Oct-10-2009 to today the debt grew from $12 trillion to $15 trillion, **REF: the 2009 budget signed by Bush-2 on 10-3-2008: Pub Law 110-343

Thank you for your resent comments. Comments are always welcome at compared to what.

Your claims of extremely liberal and bias are both understandable and confusing! Compared to what researched seventy-six years of economic policies that dominated the United States economy from 1935 to the present: Roosevelt’s-New Deal and Reagan’s-Reaganomics! Specific economic policies discussed include: Keynesian Economics, Progressive Taxation, Limited Government, Low Taxes, and Unregulated Business.

My report titled, Roosevelt’s New Deal compared to Reagan’s Reaganomics divides the past seventy-six years into two distinct periods: 1935 to 1981, and 1981 to 2011. This report simply compares America’s exceptional achievements, which were financed and completed during each of these two historic periods.

Your claim of extremely liberal could be your aristocratic view of the New Deal! OK, So What! However, your claims of bias are confusing, because all the great American achievements outlined in this report are dated, well documented, and speak for themselves! Furthermore, why are you requesting me to use bad grammar?

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Great information and clear cut! I understand that lots of people have trouble agreeing or understanding these economic plans, but what you think our country should do is completely you own bias. This information provided was acts that everyone should know a learn from. yeah some things weren't the right decisions for our country, but what is done is done. And I do say that we have a very liberal run country, so it only makes sense that we have so many ignorant people that disagree with what is right.

Clear and concise info, and yes, there is liberal bias but I happen to agree with it ;-) I would like to recommend get rid of almost all your !!! The information would come across and more scholarly without a constant call to excitement - just sayin'

You ignore Stagflation under Carter.Your deficit calculations are wrong as well https://www.thebalance.com/national-debt-by-year-compared-to-gdp-and-major-events-3306287

Reagan increased military spending after Carter (and Clinton afterwards) decimated military readiness to a laughable point (exceeded by Obama with Sequestration btw). The dividend was the collapse of the Soviet Union and tge freedom of Eastern Europe.

Progressives l8ve to tout FDR economic policies. His was success was Lend Lease. It was war and not FDR that got us out of the Great Depression. http://newsroom.ucla.edu/releases/FDR-s-Policies-Prolonged-Depression-5409

According to this link and others, FDR deepened the recession to a Great Depression and extended it for 7 years longer. In other words, Big Government failed in the long term. Works projects did help in the short term and we have examples such as dams today but the effects had no permanent jobs impact.

Lot's more to say but you mix bias with downright ignoring of other factors regarding FDR. We had 8 years of failed Keynesian economics again along with a failed Healthcare Act (majority of new covered under Medicaid expansion, NOT HCA!)

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